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Question 1. Which of the following best defines the “objective theory of contracts”? A) The parties’ internal, subjective intent determines contract formation. B) A contract exists only if both parties sign a written document. C) Reasonable outsiders determine whether a contract was formed based on outward expressions. D) The contract is valid only if it is recorded in a public registry. Answer: C Explanation: The objective theory looks at the outward manifestations of intent, not the parties’ secret thoughts, to decide if a meeting of the minds occurred. Question 2. An advertisement that merely lists the price of a product is generally considered: A) A valid offer. B) An invitation to treat. C) A unilateral contract. D) An option contract. Answer: B Explanation: Advertisements are usually invitations to negotiate, not offers, because they lack intent to be bound upon acceptance. Question 3. Which element is NOT required for a valid offer? A) Intent to be bound. B) Definite terms. C) Consideration from the offeree. D) Communication to the offeree. Answer: C Explanation: Consideration is not required for an offer; it is required for contract enforceability after acceptance.
Question 4. An offer that states “I will keep this offer open for 30 days” but provides no consideration is: A) An enforceable option contract. B) A revocable offer. C) A unilateral contract. D) A firm offer under the UCC. Answer: B Explanation: Without consideration, the promise to keep the offer open is revocable at any time before acceptance. Question 5. Which of the following terminates an offer by operation of law? A) The offeree’s silence. B) The death of the offeror before acceptance. C) A counter‑offer by the offeree. D) The offeror’s revocation communicated after acceptance. Answer: B Explanation: The death of the offeror before acceptance ends the power to accept, terminating the offer. Question 6. The “mirror image rule” requires that an acceptance must: A) Be communicated within a reasonable time. B) Contain additional terms not in the offer. C) Exactly match the terms of the offer. D) Be made in writing. Answer: C
Answer: B Explanation: Silence is generally not acceptance unless the offeror has clearly indicated that silence will be deemed acceptance. Question 10. Which of the following is a legally sufficient consideration? A) A promise to give a gift. B) A promise to perform a pre‑existing contractual duty. C) A promise to refrain from suing in exchange for money. D) A promise to do nothing. Answer: C Explanation: Giving up a legal right (e.g., refraining from suing) in exchange for money is a detriment and constitutes consideration. Question 11. The pre‑existing duty rule prevents enforcement of a contract modification because: A) The original contract was void. B) The parties lack capacity. C) No new consideration is given. D) The modification is illegal. Answer: C Explanation: Modifying a contract without providing new consideration generally fails under the pre‑existing duty rule. Question 12. Which doctrine allows enforcement of a promise even without consideration if reliance causes injustice? A) Promissory estoppel. B) Unconscionability.
C) Parol evidence rule. D) Statute of frauds. Answer: A Explanation: Promissory estoppel enforces a promise when the promisee reasonably relies on it to their detriment. Question 13. A minor may disaffirm a contract for: A) All contracts, including those for necessaries. B) Only contracts for non‑necessaries. C) Contracts that are voidable at the minor’s discretion, except for necessaries. D) Contracts that have been performed by the minor. Answer: C Explanation: Minors can void most contracts, but they remain liable for reasonable value of necessaries. Question 14. The “necessaries” exception to a minor’s right to disaffirm requires that the goods be: A) Luxury items. B) Essential for the minor’s health or livelihood. C) Purchased from a licensed dealer. D) Over $500 in value. Answer: B Explanation: Necessaries are items needed for the minor’s subsistence, such as food, clothing, or shelter. Question 15. A contract entered into by a person later adjudicated as mentally incompetent is: A) Void ab initio.
A) The fairness of the contract’s terms. B) The bargaining power and negotiation process. C) Whether the contract is illegal. D) The duration of the agreement. Answer: B Explanation: Procedural unconscionability examines the process, including oppression or surprise, not the substantive terms. Question 19. Substantive unconscionability examines: A) The method of contract formation. B) The fairness of the actual terms. C) The parties’ capacity. D) The jurisdiction’s statutes. Answer: B Explanation: Substantive unconscionability looks at whether the contract’s terms are overly harsh or one‑sided. Question 20. A non‑compete clause that restricts an employee from working in the same industry for ten years nationwide is likely: A) Enforceable because it protects trade secrets. B) Unenforceable as unreasonable in scope and duration. C) Enforceable if signed on a company letterhead. D) Enforceable if the employee received a bonus. Answer: B Explanation: Courts reject non‑competes that are overly broad in geography and time, deeming them unreasonable restraints of trade.
Question 21. Which of the following best describes a unilateral contract? A) A promise exchanged for a promise. B) A promise exchanged for performance. C) An agreement where both parties perform simultaneously. D) A contract formed by electronic click‑wrap. Answer: B Explanation: Unilateral contracts are formed when one party promises something in exchange for the other party’s performance. Question 22. An implied‑in‑fact contract can be inferred from: A) The parties’ written correspondence. B) Conduct that indicates a mutual intent to be bound. C) A statutory provision. D) A prior oral agreement. Answer: B Explanation: Implied‑in‑fact contracts arise from the parties’ behavior that objectively shows an agreement. Question 23. A quasi‑contract (implied‑in‑law) is created when: A) The parties expressly agree to be bound. B) One party is unjustly enriched at the expense of another. C) The contract is signed but not delivered. D) The contract is partially performed. Answer: B
Answer: C Explanation: Under the UCC version of the Statute of Frauds, contracts for goods over $500 must be in writing signed by the party against whom enforcement is sought. Question 27. A contract that cannot be performed within one year from its making is: A) Void. B) Voidable. C) Subject to the Statute of Frauds and must be in writing. D) Enforceable only if signed by both parties. Answer: C Explanation: The one‑year clause of the Statute of Frauds requires such contracts to be in writing. Question 28. Which of the following documents is NOT typically considered a “letter of intent”? A) A memorandum outlining proposed terms without a binding commitment. B) A formal contract signed by both parties. C) An email summarizing negotiation points. D) A draft agreement circulated for review. Answer: B Explanation: A fully executed contract is binding; a letter of intent is usually non‑binding and outlines intentions. Question 29. In due diligence, verifying a corporate signatory’s authority involves: A) Checking the signatory’s personal credit report. B) Reviewing the corporation’s bylaws, resolutions, and officer list. C) Asking the signatory to provide a notarized statement.
D) Confirming the signatory’s email address. Answer: B Explanation: Corporate authority is established by internal documents such as bylaws and board resolutions. Question 30. An exhibit attached to a contract that shows product specifications serves primarily to: A) Modify the contract’s price. B) Provide evidence of the parties’ intent at formation. C) Create a new contract. D) Void the original agreement. Answer: B Explanation: Exhibits help demonstrate the parties’ understanding and agreement on specific terms. Question 31. A “firm offer” under the UCC applies when: A) The offeror is a merchant and the offer is signed, promising to keep it open. B) The offer is made in an advertisement. C) The offer is made orally. D) The offer includes a price list. Answer: A Explanation: The UCC creates a firm offer when a merchant signs an offer stating it will remain open for a specified time. Question 32. Which of the following best illustrates a “counter‑offer”? A) The offeree says, “I accept as proposed.” B) The offeree says, “I will accept if you lower the price by $5,000.”
A) Adding a new term regarding delivery date. B) Accepting via email exactly as written. C) Signing the offer and returning it. D) Sending a handwritten “I accept.” Answer: A Explanation: Adding any new term changes the offer into a counter‑offer, not an acceptance. Question 36. A contract that is “void” differs from a “voidable” contract because: A) Void contracts can be ratified later. B) Void contracts have no legal effect from the beginning. C) Void contracts are enforceable if both parties agree. D) Void contracts are only unenforceable against minors. Answer: B Explanation: Void contracts lack legal force ab initio, while voidable contracts are valid until rescinded. Question 37. In a “shrink‑wrap” agreement, the contract is formed when: A) The buyer signs the agreement before purchase. B) The buyer opens the product and continues using it. C) The seller emails the terms after shipping. D) The buyer clicks “I Agree” on a website. Answer: B Explanation: Shrink‑wrap contracts become effective upon the buyer’s acceptance, typically indicated by opening the packaging. Question 38. The E‑SIGN Act primarily addresses:
A) The enforceability of electronic signatures and records. B) The taxation of digital goods. C) International trade agreements. D) The legality of cryptocurrency. Answer: A Explanation: The E‑SIGN Act gives electronic signatures and records the same legal effect as paper counterparts. Question 39. A “browse‑wrap” agreement differs from a “click‑wrap” agreement because: A) It requires a handwritten signature. B) Acceptance is implied by using the website, not by clicking “I Agree.” C) It is only used for software licenses. D) It is never enforceable. Answer: B Explanation: Browse‑wrap terms are deemed accepted through continued use of the site without an affirmative click. Question 40. Which of the following contracts must be in writing under the Statute of Frauds? A. A contract for the sale of a used car for $2,000. B. A lease for a commercial space for 18 months. C. An agreement to paint a house for $5,000, to be completed in two weeks. D. A promise to donate $10,000 to a charity. Answer: B Explanation: Leases for longer than one year fall within the Statute of Frauds and must be written.
Explanation: The rule bars extrinsic evidence that would alter or contradict the terms of a fully integrated written agreement. Question 44. A contract that is “unenforceable” differs from a “void” contract because: A. It can be enforced if the parties agree later. B. It is valid but cannot be enforced due to a legal defense (e.g., Statute of Frauds). C. It is automatically void upon signing. D. It is enforceable against minors only. Answer: B Explanation: Unenforceable contracts are valid but cannot be enforced because of a legal barrier, whereas void contracts have no legal effect. Question 45. A “material breach” is one that: A. Is minor and easily cured. B. Goes to the essence of the contract, allowing the non‑breaching party to terminate. C. Occurs after the contract’s performance is complete. D. Is caused by a force‑majeure event. Answer: B Explanation: Material breaches affect the core purpose of the contract, giving the injured party the right to treat the contract as terminated. Question 46. In the context of electronic contracts, “digital signature” refers to: A. A handwritten signature scanned and attached to an email. B. An electronic method that uniquely identifies the signer and indicates intent to sign. C. Any typed name at the bottom of an email. D. A password used to log into a website.
Answer: B Explanation: Digital signatures use cryptographic techniques to verify identity and intent, satisfying legal requirements under UETA and E‑SIGN. Question 47. Which of the following best illustrates “consideration of a legal detriment”? A. A seller promises to give a gift to a buyer for free. B. A tenant promises to pay rent in exchange for the landlord’s promise to provide a habitable dwelling. C. A friend promises to lend money without expecting repayment. D. A party promises to refrain from exercising a legal right without receiving anything. Answer: B Explanation: The tenant incurs a legal detriment (paying rent) while the landlord receives consideration (payment), forming a binding contract. Question 48. An “option contract” differs from a regular offer because: A. It can be revoked at any time. B. It requires consideration to keep the offer open for a specified period. C. It is always oral. D. It does not need to be in writing. Answer: B Explanation: An option contract is supported by consideration, making the offer irrevocable for the agreed-upon time. Question 49. Under the doctrine of “promissory estoppel,” which element is NOT required? A. A clear and definite promise. B. Reasonable reliance by the promisee. C. Full performance of the promise.
C. Make an oral contract for services enforceable. D. Void the contract entirely. Answer: B Explanation: Partial performance of a land contract (e.g., taking possession) may satisfy the writing requirement under the doctrine of part performance. Question 53. The “battle of the forms” under the UCC is resolved by: A. The last set of terms sent becoming the contract. B. The “knock‑out” rule, where conflicting terms are omitted unless otherwise agreed. C. Ignoring all additional terms and relying on the original offer. D. Requiring a written amendment. Answer: B Explanation: The UCC’s “knock‑out” rule discards conflicting terms, leaving the contract on the basis of the remaining terms. Question 54. Which of the following is an example of an “express” contract? A. A party performs services without any prior discussion. B. A written agreement signed by both parties detailing price and delivery. C. A court imposes restitution for unjust enrichment. D. A party relies on another’s promise without a written document. Answer: B Explanation: An express contract is created by explicit words, written or spoken, that outline the parties’ obligations. Question 55. A “unilateral” contract is formed when: A. Both parties exchange promises.
B. One party promises in exchange for the other party’s performance. C. The parties sign a joint venture agreement. D. The contract is implied‑in‑law. Answer: B Explanation: In a unilateral contract, the offeror’s promise is accepted only by the offeree’s performance. Question 56. Which of the following best describes “consideration of benefit to the promisor”? A. The promisee receives money. B. The promisor receives a legal right or advantage. C. The promisee suffers a detriment. D. The promisor gives a gift. Answer: B Explanation: Consideration can be the benefit the promisor receives, such as a promise to pay for services. Question 57. Under the “doctrine of frustration,” a contract may be discharged when: A. One party refuses to perform. B. An unforeseen event makes performance impossible or radically different. C. The contract is ambiguous. D. The parties agree to amend the contract. Answer: B Explanation: Frustration discharges obligations when an event beyond the parties’ control destroys the contract’s purpose. Question 58. The “UCC 2‑ 201 ” provision deals with:
